Third-way Tories

The last Conservative policy on tuition fees was condemned by commentators from across the political spectrum for its opportunism. The Tory party proposed to abolish Labour's fees while declining to say how university income would be protected. This achieved a rare outcome: uniting the nation's vice-chancellors in opposition. Even when Michael Howard became party leader, he conceded that Tory policy would do nothing to solve the £10bn shortfall in university funding and would have to be rewritten. This was conveniently deferred to allow Tory MPs to vote against the tuition fees bill even though they did not have an alternative policy. Yesterday, the education spokesman Tim Collins unveiled the Tories' third way: higher education vouchers.

Compared with its earlier efforts, the party's new proposal is more coherent. The opposition has abandoned its plan of freezing student numbers, which was unpopular with vice-chancellors, ambitious parents and potential students. It would abolish tuition fees but make up this loss to universities by redirecting £2bn or so of government funds (in loan subsidies and fee remission) into higher education income streams. This would be funnelled to universities through vouchers (called national scholarships) in a new higher education free market under which universities would be free to recruit as many students as they felt able to accommodate. Although tuition fees would be abolished, there would still be an increased contribution from students with a new commercial rate of interest on maintenance loans. Conservatives claim this would mean that graduates on average earnings would wipe out their debts two years earlier and contribute £7,000 less than under Labour's plan. Ministers counterclaimed that commercial interest rates (6.5% compared to today's 2.6%) could end up with students paying far more than under Labour's scheme.

The Tory plan will be easier to sell, but it is also more regressive. The better-off escape tuition fees, but maintenance grants for the poor are cut almost in half. Universities will not have more freedom, as the Treasury will still decide how much money will be earmarked for vouchers. Funding will still be easy to cut. A supplementary Tory endowment plan (promising a public pound for every private pound raised) will only widen current institutional inequalities. The Tories yesterday lost an ally, the National Union of Students. Vice-chancellors were being more circumspect, but are likely to reach the same conclusion and reject the plan. Rightly so.